Safety is the most important investment your business will ever spend on. This might sound a little odd generally because of course, safety rarely generates revenue itself. Moreover, it’s not a marketable good as you might expect. Most consumers don’t care if your company hasn’t suffered an injury or workplace incident for ten years, they think that’s what should have been happening anyway.
The reason we invest in safety is, of course, the human factor. It’s not acceptable for someone to be harmed on our watch, be that in the workplace or as a result of selling products and servicing clients. Safety prevents those issues and the long-term consequences of allowing our standards to slip.
In order to invest in practice, especially preventatively, you need to correctly or at least carefully calculate how and why you’re doing so. As you’ve seen with our money-focused blog, predictions, projections, models and good sense are the vital tools of any smart spender. So, in this post, we’ll discuss the true cost of failed business safety checks:
Insurance Liabilities
When safety errors take place, your insurance is relied upon to help pay for costs like medical bills or property damage. This means in the future, insurance costs can skyrocket. Sure, insurance providers' entire business model is focused on having money available in appropriate use cases and paying out when needed - but that doesn’t mean they appreciate doing so.
Some companies may even find it hard to get insured at all after big mishaps. This domino effect can lead to taking out more expensive policies for less risk coverage. And it's not just accident insurance.
Reputational Harm
Safety issues are often a stain on a reputation because it cuts more deeply than simply not having a good product or needing to downsize in a tough market. It shows that your priorities haven’t been where they should, and that’s more difficult to excuse than simply struggling to compete. In egregious cases, suppliers, partners, and even potential employees might think twice about continuing on with your firm.
In some industries, a bad safety rep can be a dealbreaker or even lead to the complete closure of business practices - the Oceangate tragedy of 2023 serving as a prime example. It's hard to put a number on it, but lost business is real and can constrict the market you’re able to operate in, only artificially this time.
Full Audits
Full audits are essential after a safety failure. You need to understand what happened, why your policies or operational measures failed, and why. This is an expensive and time-consuming process, but of course, it could potentially save a life going forward and that means it’s generally non-negotiable. You might also need to hire extra people just to deal with it all.
Moreover, it's not just one department - it can be the whole business that needs to be looked at. For example, if a restaurant kitchen has made customers ill, that’s a call to check every step of the process, from how orders are processed to how deliveries are accepted to storage to cleaning to cooking to waiting practices. Every process, every bit of paperwork, it all gets looked at to make certain no error can occur again, or you may need to pay for essential training that should have been implemented anyway, such as vital chemical repacking protocols.
You’re not forced into this unless causing great harm, but hiring an auditing firm to help you restore trust is essential. But of course, even if you pass, this process is disruptive.
Fines & Criminal Proceedings (& Associated Lawsuits)
This is where the process can become quite nasty. Fines for safety breaches can be huge - sometimes enough to sink a business. Moreover, criminal charges can mean legal fees, court costs, and even more egregious punishment.
Moreover, it’s rarely discussed, but some lawsuits can stretch on for years if repeated negligence is proven.
Opportunity Costs
This one's tricky because while opportunity cost is usually about the missed cost of selecting one business practice over another, in this case the cost has been decided for you.
While you're dealing with safety fallout, you're not growing the business. Your essential labor is being diverted to restorative measures, not a progressive focus on the future. New projects might get put on hold as a result, or you might lose out on contracts because you're too busy putting out fires. Good people might leave because they don't want the hassle.
With this advice, you’ll likely remain even more convinced that safety issues, outside of the obvious truth of harm which should be reason enough, are just an utterly intolerable threat to your business. Unfortunately, some firms fail to understand this process or think they can get away with it until their bottom line is impacted. With such insight, we can all move corporate culture to avoid wilful harm.
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